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Why Give a Stock Gift
Why you should give appreciated assets to St. Andrew’s, or any charity you support!
When most people are asked to make a charitable gift, they reach for their checkbook or credit card. Why? Because giving cash is simple and convenient.
But did you know you can give more, without stretching your pocketbook, by donating appreciated assets, such as publicly traded stocks or mutual funds?
The example below shows how a gift of $10,000 worth of publicly-traded stock would only cost you $4,900, versus a gift of cash which would cost you $6,500.
But did you know you can give more, without stretching your pocketbook, by donating appreciated assets, such as publicly traded stocks or mutual funds?
The example below shows how a gift of $10,000 worth of publicly-traded stock would only cost you $4,900, versus a gift of cash which would cost you $6,500.
Cost of Giving a Cash Gift – The Most Expensive Option
* You make a $10,000 gift by check or credit card
* If you are in a 35% tax bracket and itemize your deductions, you reduce your taxes by $3,500 (35% * $10,000), thus the “Net cost” of your gift will be $6,500 ($10,000 - $3,500) [1]
* This seems simple and easy, and you may feel great about supporting St. Andrew's in this manner, but you gave a gift in the most expensive way possible.
Here is even better news:
Based on the 35% tax bracket, you could give $13,555 of appreciated securities, nearly 33% more, and incur the same cost as a $10,000 gift you intended to give by check or credit card.
Larger Gift, but at the same Net Cost $6,500 as a gift of $10,000 in Cash
(Tax Deduction of $4,744 + Cap Gains Tax Avoidence of $2,311 = $6,500 Net Cost)
* If you are in a 35% tax bracket and itemize your deductions, you reduce your taxes by $3,500 (35% * $10,000), thus the “Net cost” of your gift will be $6,500 ($10,000 - $3,500) [1]
* This seems simple and easy, and you may feel great about supporting St. Andrew's in this manner, but you gave a gift in the most expensive way possible.
Cost of Giving Appreciated Securities – The Most Cost-Effective Option
* You make a gift of $10,000 worth of publicly-traded stock you purchased ten years ago for $2,000
* You are in a 35% tax bracket and you itemize your deductions, you reduce your taxes by the same $3,500 as a gift of cash in the example above [1]
* You now avoid the capital gains tax on the $8,000 gain if you had sold the stock outright
* You are in a (federal and state) 20% capital gains tax bracket, you save an additional $1,600 ($8,000 x 20%) in capital gains tax
* By donating the stock instead of cash, the net cost of your gift will be $4,900! ($10,000 - $3,500 - $1,600). Same gift amount but it cost you less to make the gift
* You are in a 35% tax bracket and you itemize your deductions, you reduce your taxes by the same $3,500 as a gift of cash in the example above [1]
* You now avoid the capital gains tax on the $8,000 gain if you had sold the stock outright
* You are in a (federal and state) 20% capital gains tax bracket, you save an additional $1,600 ($8,000 x 20%) in capital gains tax
* By donating the stock instead of cash, the net cost of your gift will be $4,900! ($10,000 - $3,500 - $1,600). Same gift amount but it cost you less to make the gift
Here is even better news:
Based on the 35% tax bracket, you could give $13,555 of appreciated securities, nearly 33% more, and incur the same cost as a $10,000 gift you intended to give by check or credit card.
Larger Gift, but at the same Net Cost $6,500 as a gift of $10,000 in Cash
(Tax Deduction of $4,744 + Cap Gains Tax Avoidence of $2,311 = $6,500 Net Cost)
To discuss more, or to arrange a transfer, please contact David Pivirotto, Associate Director of Advancement, at dpivirotto@saes.org or call 301-983-4725.
Disclaimer: This case study is intended to provide information of a general nature only and is not intended to provide legal, accounting, investment or other professional advice. Any persons mentioned within this case study are fictional with any resemblance to real persons, living or dead, coincidental. Tax law rates and federal discount rates used in examples are based on those rates in effect at the time of publishing. Those viewing this case study should always check for latest tax and other relevant state and federal laws and regulations prior to completing charitable gifts.
Footnotes [1] The amount of charitable deduction you can claim in any one year is limited to a percentage of your adjusted gross income. For gifts of cash to public charities, the limit is 50% of your adjusted gross income. For gifts of long-term capital gain property, the limit is 30%. In both cases, any deduction that exceeds the amount you can claim in the year of your gift due to these limitations can be carried over up to five additional tax years.
To discuss more, or to arrange a transfer, please contact David Pivirotto, Associate Director of Advancement, at dpivirotto@saes.org or call 301-983-4725.
St. Andrew’s Episcopal School is a private, coeducational college preparatory day school for students in preschool (Age 2) through grade 12, located in Potomac, Maryland.